As part of a deal, Calugar, who owned Security Brokerage in Las Vegas, pleaded guilty to one count of felony fraud. He will be sentenced in New York State Supreme Court on March 23. He faces up to four years in prison.

Calugar's deal with Spitzer comes two weeks after he settled a case with the Securities and Exchange Commission,agreeing to pay $153 million in restitutions and fines. Calugar, 52, now lives in Ponte Verda Beach, Fla. He was unavailable for comment.

Spitzer claimed that Calugar, whose shop was in Las Vegas, but who lived in Los Angeles, cut a deal with two employees at Franklin Resources in San Mateo, Calif. The pair allowed him to make rapid trades of the Franklin Small-Mid Cap Growth fund, and waived the standard 2% penalty fee. In return, Calugar vowed to invest $10 million in a Franklin hedge fund, according to Spitzer. Spitzer said the arrangement cheated other shareholders of more than $1 million.

In October, Calugar settled a $72 million Federal class-action lawsuit brought by shareholders of the fund. Franklin settled civil charges of fraud with the SEC for $50 million in August 2004.